number two, piers morgan deported. number one change at cnn, more coverage of goats. >> abc 7. could you not eat my pants? >> i'll see you back here at the top of the hour. your bottom line starts right now. do you feel richer? good morning, everyone. i'm christine romans. 2013 could be a boom year for the economy. how do you capitalize? start with understanding that today smart is the new rich. who better to have on than the smartest, richest man in the u.s., bill gates? you'll hear from him in a moment. plus, media mogul arianna huffington on creating jobs. first, the soaring stock market. does that mean the economic recovery is real or is something else going on here? looming budget cuts. >> we can't keep spending money we simply do not have. >> tax uncertainty.

>> the deficit is still too high. >> gridlock over how to fix it. if it weren't for politicians in washington, 2013 could be a boom year. take a step back. your home, your investments, your job. the three ways most people build wealth are all set to take off. home prices rose 5.5% in november, biggest jump in six years, stocks are at five-year highs, near records. the dow is up 800 points in just four weeks. jobs are coming back. things are looking bright in 2013, but to capitalize, you'll have to get ready. and get smart. because smart is the new rich. company profits are up, home prices are up, markets are way up. sandy, why is this market up? i mean, end of last week, i see gdp actually shrank in the end of 2012 but markets are near records. why? >> i think three different things are going on. we are seeing signs of strength

in the economy, notwithstanding the weak gdp figures. there was a lot of temporary stuff going on there. if you look at computer spending, housing in particular, you're seeing signs of strength. secondly, interest rates are extremely low and the fed has said it will keep them low for a long time, helping to fuel the rally, helping to push people back into stocks and rightly so. and the third is i think the kind of fear of serious uncertainty, falling off the fiscal cliff is gone. we've only put off a few of the fiscal problems but that sense of real fear that was there for a lot of 2012 has lifted. you put those three things together, you can explain some of what's been happening in the markets. >> author of finance and the good society. you successfully predicted more than one stock market crash, the collapse in the housing market before 2008. also the co-creator of the case schiller index, the leading mark

of the housing market. looks good. people say the housing recovery could lift the entire economy. you're not completely convinced. why? >> well, in terms of the housing market, it's been down now for six years. and this is a -- has a lot of momentum in the housing market. it seems like some people are -- i don't mean to be too negative. you asked why i'm not jumping on to the band wagon. it's because there's been a decline in home ownership rates. people are not so excited about homeown ownership now. renting starting to look better. the economy. you know all about the -- the european and the world economy, all these things are kind of risk factors. so, i don't -- i'm not too optimistic. it might go up. it's not a disaster i'm predicting. >> it's been five, six years of really horrible housing news. so a little bit of recovery, those green shoots as they call them in housing doesn't necessarily mean the whole

garden is growing wildly. people are still -- people do still have too much debt. zanny, what do you think about the housing recovery? is it enough to power an economic recovery in 2013 or is housing still just too small overall size of the economy now? >> you know, in matters of housing i will always defer to professor shillor. it has been horrible for such a long time and there has been a huge, enormous adjustment in house prices. i'm reasonably confident that this turnaround we're seeing is now for real. are we going to see a repeat of the early 2000s when we saw that absolute real estate bubble? i don't think so. and certainly i hope not. that's not what we want. but i do think that housing will contribute to growth and i think it's going to put construction, help consumer confidence. i think it will be a bright spot in the economy this year. there are dark shadows. the most important of those, as you mentioned earlier, is really washington. what happens in washington and how much they cut spending and how fast they do it. >> let me ask you, robert, about the fed. how much credit does the fed get for keeping interest rates so

low? or is housing recovery because the job market is not a disaster anymore? the job market is slowly healing, people have confidence that they can move, buy a home, and will have the income to pay for it. >> the housing recovery is something that happened suddenly in 2012. it was declining before that. so i don't know that we can credit the fed for having done th that. of course, they did this purchase, mortgage purchase, mortgage security purchase program, which has probably added confidence. i don't know. i think that other psychological factors are -- one of them is we're through the election. we have a sense of new begin g beginning. it's right. we've been going on in kind of a weak economy for an awfully long time. people change their minds. you know, animal spirits come back. i think we may be in an up housing market. i just don't think it's secure

yet. >> really smart conversation to start your saturday morning. zanny mittten beddos, robert shillor, thank you. have a great weekend. >> thank you. en beddos, robert shillor, thank you. have a great weekend. >> thank you. ...tax time can ofbe...well...taxing. so right now we'll give you... ...$10 off any turbo tax deluxe level software or higher! find thousands of big deals now... ...at officemax. for those nights when it's more than a bad dream, be ready.

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we learned something about the job market. we learned it's modestly improving, that 157,000 jobs were created in january. we know when you look at the trend since this president took office, we have reversed those horrible months of massive job loss and we've slowly been improving. 28 months in a row of positive job creation. we also know the end of last year was slightly stronger than we had expected. november and december jobs numbers revised up. you look at the sectors, there's some hiring because of housing and recovery from super storm sandy. health care jobs, always a predictable performer in this economy, health care jobs as well and retail jobs, defying expectations and holding in there. the youth unemployment rate is

now 16.8% for young workers. it's always slightly above the rate for everyone else. younger workers don't have the spoerns or skills that the employers are looking for. since the recession hit, that gap has grown, jumping to a 6.5% difference to more than 10% in 2013. that's a lot of people not saving for retirement, not paying taxes, not getting a start in the economy. a third of the u.s. population is under 24 years old. i'm joined by arianna huffington. what are the risks for the economy if so many young people are not working? >> i think the risks are really serious. they call it the scouring effect. when you graduate from college and you don't get a job or have just graduated, another daughter in college and a lot of their friends are deeply concerned about the fact that over half of them, over half of those graduates last year are either unemployed or underemployed.

that's unprecedented over the last decade. it had never been so high. we are talking about over a million students. and on top of it, christine, that is really what is so tragic. they're burdened with massive debts. over a trillion dollars is now the college loan debt, higher than credit card debt. >> unlike the resources to weather it out, wait for a good job and connections of a network to get into a good job or good company, you have these kids taking part-time jobs, jobs that don't require a college education and they're being sidelined in the service industry. they're losing that first rung on the ladder. is it the lost generation? >> it's actually worse than that. it is we who have failed them. we have failed them. as you look around, the whole debate after the election has not been jobs. during the campaign it was jobs, jobs, jobs but now it's gun safety. a very important issue. >> yeah. >> getting out of afghanistan, an important issue. it's immigration, an important issue. but jobs is a critical issue.

and the numbers we saw this week -- yeah, they're a little better. but the bottom line is that if they continue at that rate it's going to take us seven years for us to get to prerecession job numbers. seven years. and so i really think that we can't just sit idly by the sidelines. >> what should we do? >> i really think what's happening, you see young people themselves trying to create jobs themselves, start-ups. we launched a prize competition called job raising. $250,000. and different non-for-profits competing for the most innovative job creation idea. we have the community adding additional money, raised an additional $200,000. because people feel that it's not enough now to just lobby the government to do something. what can we do. >> i know. >> there's a lot that's happening. providing education for young

people and years of training. >> i think every university should have mandatory entrepreneurial classes for all kids. they're going to need to know some of these skills. they're seeing lower wages once they do find a job. young college grads are earning $10,000 a year less than they would have in 2005. so it's almost as if once they get their foot in, they're not enjoying what generation x would have enjoyed. >> really the -- ultimately what it means is that the american dream is not alive and well. because the american dream, that i have been very happy to benefit from, has been about doing everything you can, working hard, playing by the rules and then doing better than your parents were doing. and we don't see that. we see more and more college graduates returning home to live with their parents, which i'm very happy with myself, of course. i'm greek and i love having my

kids living with me. but it was not the way that it was intended to be. >> when you say even among all different kinds of americans, we're moving back in because of high housing cost, high child care costs, that can be an upsi upside. so much of this is so discouraging. take me out 20 years from now. how have we fixed this? in your perfect, perfect world, how will this be fixed in 20 years? >> in my perfect world it will be all of us doing our part. can you hire one more person? just, for example, we hired four paid interns from europe. what can we do as employers? even if it is one additional person. how can we support young people to create their own start-ups through mentoring, through advice? it's not going to be the same way we created jobs in the past. it's going to be a whole new start-up generation. >> i have high hopes for so many of them because they're wired from the day they were born. we learned how to use technology. they know how to use technology in the workforce.

they have different expectations for the workforce. i'm hoping that will be something that will really help that group. thank you so much, arianna. >> thank you, christine. good to see you. does america's most successful college dropout have a case of do as i say not as i do? >> more of this economic cycle, unemployment will be determined by educational achievement. >> bill gates is on a mission to fix this country's education system. that's next. new nectresse. the 100% natural no-calorie sweetener made from the goodness of fruit. new nectresse. sweetness naturally. by the armful? by the barrelful? the carful? how about...by the bowlful? campbell's soups give you nutrition, energy, and can help you keep a healthy weight. campbell's. it's amazing what soup can do. campbell's. all stations come over to mithis is for real this time. step seven point two one two. verify and lock. command is locked.

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in 1995, bill gates famously called for a computer on every desk and in every home. today, he has a different vision, an education for every child. bill gates transformed microsoft from the dorm-room start-up to the largest software company.

making him america's richest man after giving $28 billion away. now america's most successful college dropout is investing in america's schools. and there's no doubt that america's schools need fixing. just one in four of america's high school graduates meets college readiness benchmarks in reading, writing, math and science. bill gates foundation has spent $5 billion on education so far. latest initiative, evaluating the performance of america's 3 million teachers and using the data to develop professional development system that is work. the goal? to increase high school graduation rates and get america's students into college. >> the number of jobs for high school dropouts or people that only have high school education, that's going down. so more in this economic cycle, unemployment will be determined by educational achievement. united states universities are still, by far, the best in the world. the research that comes out of there, graduate students are

phenomenal. a lot of those students are foreign born and get sent back. they're not allowed to work here in the united states. and that's still united states. and that's still a sliver. the bulk of our universities need to improve because they have higher dropout rates than other nations. and our k through 12 system has a higher dropout rate than others do, as well. so because it's so central to equal opportunity and central to our economic future, we've got to improve our education system. other people ahead of us in the pieces besides the top universities. >> do better teachers make better students? >> oh, absolutely. they -- if our teachers were all as good as the top, we'd be the best in the world. our teachers get the least feedback of any system in the world. 95% never hear "you're good at

this," "you're not good at this." >> how do we fix that? i know we're talking about measuring cities and states are. we getting better? >> there's only a few programs like that. and those all got started just in the last five or six years when the no child left behind data made it clear that we were failing, particularly in the inner cities. so we need to step up the amount we're doing that. a lot of people when it came to measurement thought it could just be the test scores. and so they made that the measure. it doesn't really tell you as a teacher what you need to improve. it's kind of just a raw measure. and so what we've shown through a lot of research we've gotten involved with is that you've got to have observations in the classroom where you look at how the teacher engages students. you've got to have student surveys. and then combine that with careful use of test scores to not just rank but to be very

clear about what part of the practice they need to improve. >> you can check out more with bill gates on this week's "fareed zakaria gps." "fareed zakaria gps" airs every weekend, sunday at 10:00 and at 1:00 p.m. eastern. coming up -- we must make hard choices to reduce the cost of health care and decrease the deficit. >> liberal economists talk about it more after the break. you ned to double-check the temperature on the thermometer, be ready. for high fever, nothing works faster or lasts longer. be ready with children's motrin. olaf gets great rewards for his small business! pizza! [ garth ] olaf's small business earns 2% cash back on every purchase, every day! helium delivery. put it on my spark card! [ pop! ]

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$52,000. that's how much you owe to america's creditors. last year the u.s. government

spent $3.8 trillion, roughly 2/3 of that came from tax revenue. mostly tax revenue. the rest was borrowed. $1.3 trillion. that shortfall is called the deficit. when you add together all the annual deficits and the interest on them, you get the national debt. today that stands at $16.4 trillion and a whole lot of change. that comes out to $52,000 for every american man, woman, and child. economists agree the best way to bring down that number is to grow the economy. that means more tax revenue coming in and fewer people relying on the social safety net. new numbers show the economy isn't growing. the economy is shrinking. america's gdp fell by an annual rate of 0.1% in the last quarter of last year. the last time that hand was during the recession. economics professor and unapologetic liberal paul krugman says the u.s. needs to wait for economic growth come back before even thinking about spending cuts. >> the power of the household

analogy is very strong. remember, we all -- the liberal leeng congress made fun of boehner when he said families have to tighten their belts, the government does, too. that's stupid. three months later, obama was saying the same thing. >> the difference is, america owes itself, right? when you look at who owns our debt, we own our debt. >> yeah. some of it is overseas. the main thing is that the debt's in dollars. we can't run out of cash. we print the stuff. >> right. >> and greece, the crucial thing is not so much that the debt is owned by non-greece as that the debt is in euros. that gives them way less flexibility. if you take a country like us, to me it's even hard to tell the story. you say, you know, supposed that we have a run on -- supposed that foreigners decide we're not reliable. how does that drive up interest rates? the fed controls short-term interest rates. long-term interest rates reflect expected short rates. how is that supposed to happen? the answer is actually it's not

an easy story to tell. >> economics, news, politics. right now washington is run by politics. so they are in a budget-cutting mode. they are in a spending, cutting spending mode. how do they do that and not hurt the economy? >> well -- >> they're going do it, right? >> big spending cuts in the near term look a lot less likely now than they did a couple of months ago. so people are -- >> that makes you happy? >> that makes me happy. and, you know, the -- there's no imminent crisis that's being dealt with. even the ten-year outlook si not that bad on the budget. so we don't need to do this. you know, eventually yes, there's all kinds of stuff. but this whole obsession with the deficit has actually been i'd say almost purely destructive because it has, in fact, led us to some short-term budget cuts that are harmful. it has not led to any resolution of long-term issues which i don't think is possible in this political environment. >> is there any way now to create a bunch of jobs? >> oh -- >> how? how would you create jobs right

now? >> if we could do a slug of federal aid to state and local governments that would let them rehire school teachers they laid off and restart the road repair project they've put on ice. right there you could create over a million jobs directly and a half million more indirectly through the effects of demand. if we did that, within 18 months, the unemployment rate would be somewhere in the low sixes. it's -- technically, economically it's the easiest thing in the world. politically we know it's not going happen. it's all about the politics. it's not about economics. >> let's keep the conversation going. you can find us on facebook and twitter. our handle is cnnbottomline, my handle is @christineromans. join me at 1:00 p.m. for "your money." hear why bill gates is so frustrated with the illegal immigration policy. >> i would like to see the illegal immigration a tougher problem. the high-talent immigration has been held hostage to that